10 Retailer Updates

Adam & Eve: The retailer of adult toys and lingerie expects to grow its store base by 20% this year, saying franchisees are signing deals to open multiple units. The company recently opened its 100th store, at a shopping center in Fredericksburg, Virginia.

Century 21: In partnership with hospitality management firm Legends, the retailer will reopen its four-level flagship in New York City on Cortlandt Street, near the former World Trade Center, next year. The store will offer the same discounted designer label merchandise for which it was famous before closing all 13 of its stores in December 2020.

The Container Store: The operator of 94 stores posted its first billion-dollar year since its founding in 1978. “With only 5% of total market share today, we are confident in the opportunity ahead to grow sales to $2 billion by fiscal 2027,” said president and CEO Satish Malhotra. “We are excited to return to store growth with a plan to open two new stores in fiscal 2022 and a plan for an additional 74 new stores by fiscal 2027. This growth, coupled with our more productive store base and disciplined expense management, is expected to result in low-double-digit operating margins over time as inflationary headwinds abate.”

Cotton On: The Australia-based apparel retailer signed a deal with Macerich to open 17 stores at the landlords’ properties. It already operates 12 in Macerich properties. The Cotton On Group stores coming to Macerich properties include Cotton On, Cotton On Kids, stores combining both of those concepts, and Cotton On Body.

Google: The tech company will open its second physical store — in Williamsburg, Brooklyn — in mid-June. The Google Store Williamsburg will be smaller than the company’s first store, which opened last year in Manhattan, but will offer similar services and hands-on experiences with Google products.

Instagram: The social media platform celebrates the growth of its three-year-old online shopping channel by running a pop-up in New York City’s Chelsea today and tomorrow. The shop will stock products from the small retailers, many minority owned, that sell through Instagram Shop.

Kohl’s: It seems inevitable that the retailer will be acquired after it posted a massive earnings loss in its first quarter and cut its profit and sales outlook for the rest of the year. Kohl’s stated that final and fully financed bids from potential buyers are expected in the coming weeks. CEO Michelle Gass said the retailer has been “pleased with the number of parties who recognize the value of our business and plan.” Kohl’s has faced pressure to find a new owner since activist hedge fund Macellum Advisors pushed for the company to do so earlier this year, arguing that Gass hasn’t done enough to grow sales.

Southern Grounds: The seven-year-old coffee chain is tapping franchisees to grow its business beyond the four locations it operates in Florida. The company, which serves ethically sourced coffee alongside locally sourced food items, aims to operate 125 locations within 10 years.

Target: The chain has found it increasingly expensive to keep up with a steady stream of value-seeking customers. Guest traffic increased by 4% year over year in the first quarter, helping push sales at stores open at least a year up 3%, executives said. However, unexpectedly high operating expenses cut into profits. E-commerce sales grew by 3.4%.

Walmart: The retailer said sales at stores that have been open at least one year increased by 3% year over year for the 13-week period that ended April 29. That impressive top-line growth was not enough to offset slimmer profit margins, according to analysts. Gross profit declined by 87 basis points, and operating expenses climbed 45 basis points thanks largely to supply chain costs and higher wages paid to employees. The extra expenses caused Walmart’s operating income to plunge 23% compared to the previous quarter. “Walmart’s softer than expected earnings for the first quarter demonstrate that no retailer is immune from the higher cost pressures reverberating throughout the retail sector,” Moody’s retail analyst Mickey Chadha said. “It is increasingly difficult to pass on higher prices to consumers while dealing with higher wages and employee costs.” Walmart’s e-commerce sales grew by only 1% during the quarter.